Growth
Business units that are investing in research, product development and growing new product lines or brands. For example, a telecom company with a business unit for data centers.Legacy
It is common to structure legacy products and services that are in decline into a separate business unit. For example, a global media company with a business unit that manages its television networks.Turnaround
Structuring some failing part of the business into a separate department or team in order to try to turn this business around. For example, an advertising agency that has struggled with digital advertising that separates this into a separate unit as part of a turnaround plan.Geographic
Structuring sales to different regions as different businesses with responsibility for profit and loss. For example, an auto company with business units for Europe and North America.Product Line
Business units based on product line or product type such as an video game company with different units for hardware and software.Channels
Structuring distribution channels as different profit centers. For example, a fashion retailer with different departments for retail and ecommerce.Core Business
It is common for a business to structure its primary revenue streams in one unit and secondary sources of revenue in separate units. This is done to focus on core revenue without distraction. For example, an automaker that has a core division of automobiles and separate business units for relatively minor revenue streams such as battery systems.Brands
A firm may structure itself as many brands that is each managed by different departments that are responsible for profit and costs. For example, a large luxury brand that operates 34 brands as separate business units.Customer Segments
Different business units for different sets of customers such as a bank with a retail banking, wealth management and capital markets divisions that focus on regular customers, wealthy customers and institutional customers respectively.Discussion
Business units are also known as strategic business units. It would be unusual to refer to a functional team that has no responsibility for profit and loss as a business unit. These are generally known as functional units. It is also common to refer to business units as profit centers and functional teams as cost centers.Strictly speaking, a department that is only responsible for revenue and not costs isn't a business unit. For example, a sales team is typically responsible for revenue but is not directly accountable for profit & loss.Overview
A business unit is a division, department or a team within a firm that is responsible for its own profit and loss. In other words, a business unit is an internal structure within a firm that is run as a separate business.
| Summary: Business Unit | ||
Type | ||
Definition (1) | A department or team that manages revenue generating products and services. | |
Definition (2) | A department or team that is responsible for both revenues and costs. | |
Also Known As | BUStrategic Business UnitSBUProfit Center | |
Related Concepts | ||
